 Hello, in this presentation we're going to be talking about the accounting cycle or the accounting process. That process that the accounting department will go through on a systematic basis over and over and over again, typically thought of as a monthly process, although it could be thought of as a yearly process or some other process in terms of the amount of time that will pass. But these are going to be the steps that will be gone through in terms of the accounting process, always keeping in mind that end goal of financial accounting, which are the financial statements. Some texts will have more steps than five as we have here. Some texts will have less than five steps. But the goal here is to really have a broad picture, big picture, so that when we think about the accounting process, we can break down that that big picture view. Five is a pretty good number for us to be able to memorize and keep in our mind. If we have more than that, it can start to kind of muddy the picture. So once we get into each of these individual steps, we want to get into more detail, obviously. But when considering the overall picture, five is a good amount of steps. And it's enough for us to understand those different steps and understand the big picture view of what is going on as we go through the month. First step we're going to consider are they going to be the normal transactions? Are the things that the accounting department is doing? Entering the invoices, entering the bills, dealing with payroll? All the stuff that we generally think of in terms of the accounting department, we're going to group into step one. So in terms of timing, step one is far greater than any of the other steps, because that's what's happening throughout the entire month. Everything else is basically happening pretty much at the end of the month. For example, at the end of the month, we're going to then reconcile the bank accounts. I'm going to include the bank accounts as a step in and of itself because it's really a huge internal control, second only to the double entry accounting system itself. And it's really defining that point in time in which we're moving from the normal business transactions to the next step, which will be the adjusting journal entries. The adjusting journal entries will then be used to create the adjusted trial balance, which will be on an accrual basis or as close to one as possible. And all of this happens again, as of the end of the time period, as opposed to what happens for most of the time period, which are those normal transactions. Once the adjusting entries have been done, we can finally make the financial statements. This is the end goal. We have the asterisks here because this is the end product that we're really looking for. This is what the external users of the financial statements and most of the reports for managerial accounting are wanting those financial statements. But notice it's step four of five. It's not the end, although that's the main event. We still have the cleanup process, the closing process, and that's going to be our final process. We'll have to close things up to get us ready for this whole system to start again at which time it will start again. So let's go through those steps in a bit more detail. We're starting off once again with the record normal business transactions. This is step one, really what is going on, and that entails mainly everything that we're doing throughout the entire month, which is the payroll department, the accounts receivable, the accounts payable, entering all the transactions, bills, invoices, everything is going to be all included in this step one. So in terms of timing, this step is way bigger than the rest of the steps. The rest of the steps are really going to be the things that we're going to have to do to refine this information down to make those financial statements and then be ready for the next time period. So these are going to be the steps where we have the normal journal entries. We're compiling the data from the financial transactions that are happening. We're recording all of those transactions to the general ledger. The general ledger is being used to make the trial balance. We might have an automated system doing this. We might not be entering journal entries, but the journal entries are being entered in some way. When we make an invoice, a journal entry happens. When we make a bill, journal entries happen. When we write a check, a journal entry is happening. This is what's going on. We're recording the data throughout the month. At the end of the month, then that's when we got to decide, okay, the month is now going to close. We have to think about that cutoff. We're going to want to make the financial statements. That's the end goal as of the end of the month. And so step two, bank reconciliation.